Zuckerberg consolidates power after high-level defections...
Instagram founders' exit means no one to challenge
Zuckerberg
Sep 26 2018 07:44 Sarah Frier, Bloomberg
Shares of Facebook fell after the founders of Instagram
left the social networking giant under unexplained circumstances.
While he took time off for paternity leave this month,
Instagram’s Kevin Systrom had time to reflect on all the small ways Facebook
had started to impose its will on the photo-sharing app he co-founded.
Earlier this year, his parent company asked for prompts
within Instagram that would drive traffic and add content to its main social
network. Meanwhile, Facebook removed some of the links to download Instagram
from the Facebook app, people familiar with the matter said.
Facebook also wanted more influence over Instagram’s
functions such as ad sales, reducing the potential for growth in the app’s own
staff in the coming year. Then, in July, CEO Mark Zuckerberg seemed to take
credit for Instagram’s success on the company’s earnings call.
Systrom and his co-founder, Mike Krieger, had spent six
years running Instagram as a division of Facebook, while pursuing their own
vision for the app – even when that was sometimes at odds with Zuckerberg’s
ideas.
Lately Facebook had become relentless in its pushes for
data sharing, product integrations and other moves that would benefit the
overall company, said the people, who asked not to be named discussing internal
dynamics. When Systrom came back from leave this week, he and Krieger abruptly
announced that they were leaving the social media giant. Facebook was not
prepared for the news.
“Building new things requires that we step back,
understand what inspires us and match that with what the world needs,” Systrom
wrote, without mentioning Zuckerberg. “We look forward to watching what these
innovative and extraordinary companies do next.”
He used the plural – “companies” – even though without
him and Krieger, Instagram will most likely start to become less of a separate
entity. The founders’ exit clears the way for Zuckerberg to achieve his vision
for cross-promotion among what he calls a “family of apps,” the group that
encompasses Facebook, WhatsApp, Instagram and Messenger.
Instagram will probably become more integrated behind the
scenes, sharing some teams and product goals with Facebook, people familiar
with the matter said.
No longer will anyone have founder-level authority to
challenge Zuckerberg’s ideas with a discrete vision for the app’s future and
brand. While absorbing Instagram more completely could help Facebook reach the
goals it’s set for the app’s contribution to revenue growth targets, it may
also threaten the unique culture that Instagram’s founders sought to preserve.
Amid mounting scrutiny around Facebook’s data practices
and its role in the spread of misinformation and hate speech, people have
flocked to Instagram as an alternative. Any shift to become more Facebook-like
could risk the very thing that has attracted new users and kept them coming
back to Instagram.
Facebook representatives said they had no comment beyond
a statement from Zuckerberg on Monday night.
For years, Instagram relied on Facebook for resources and
infrastructure, giving it enough technical backbone to support its user growth
and to quickly scale up in advertising. But because Facebook’s main product was
still fueling the business, Instagram’s management could get away with being
choosy about what product tweaks to make.
Systrom explained in a Bloomberg Television interview in
2016 that working with Zuckerberg was like having him on Instagram’s board.
Instagram’s near-independence became a model for future acquisitions, including
the 2014 purchases of WhatsApp and Oculus – divisions that have both also
recently lost their founders.
Now, Facebook is experiencing a decline in engagement on
its main network – some of which is due to user fatigue, and some of which is
the result of product tweaks by Facebook to move attention away from harmful
viral content.
The trend isn’t helped by heightened government scrutiny
over privacy and election interference. Instagram, which is growing more
quickly and has its reputation intact, will be more crucial to Facebook’s
future.
That spurred increased interest from Zuckerberg and
pressure on Instagram to scout out new sources of revenue and user growth that
can feed into the overall company – Instagram’s turn to give back after years
of support from Facebook.
Zuckerberg’s pursuit of more influence at first started
showing up in small ways. Earlier this year, Menlo Park, California-based
Facebook began testing a way to show notifications for its social network
within Instagram.
Photos that users cross-posted from Instagram to Facebook
ceased to be prominently labeled as originating from the photo-sharing app. And
Instagram found it was getting less space to advertise its app within Facebook
– prime real estate that had directed traffic to its service over the years.
Zuckerberg and Systrom have always had lively debates
about the future of Instagram at their regular dinner meetings at Zuckerberg’s
Palo Alto home.
Systrom was particularly stubborn about making moves that
might change the character of the app –- which is more focused on aspirational
photography of vacations and lattes than the viral political news and birthday
wishes that are standard Facebook fare.
But those healthy debates evolved in recent months into
uncomfortable tensions as Facebook’s revenue growth started to slow. Zuckerberg
has become more invested in pursuing his vision for Instagram now that products
such as Instagram Stories, the ephemeral sharing tool and Snapchat rival that
grew popular on the app, are turning out to be important sales drivers.
Systrom had to push harder to make bets that might
compete with Facebook, like the IGTV video product. In the spring, he started
reporting to Chris Cox, the Facebook chief product officer who took charge of
the “family of apps,” instead of Michael Schroepfer, Facebook’s CTO. That meant
he had less of an avenue to speak directly with Zuckerberg on product-specific
issues, the people said.
This year, Zuckerberg started mentioning Instagram more
frequently on the company’s earnings calls, touting the app’s rise to more than
1 billion users as a testament to how effectively the acquisition was
integrated within Facebook.
With Facebook’s help, Instagram grew “more than twice as
quickly as it would have on its own,” Zuckerberg said in July – a comment that
Instagram employees felt was unprovable, and took as evidence of the
billionaire’s desire to take credit for Instagram’s rise.
The founders’ departures cap a string of executive moves
at the photo-sharing app, and at Facebook more broadly. Marne Levine, the
Instagram chief operating officer who helped the app operate harmoniously with
its parent, will transition to an executive role at Facebook, leading global
partnerships and business development, the company said this month.
Nicky Jackson Colaco, Instagram’s director of public
policy, recently left the company. Kevin Weil, the head of product, was
replaced by Adam Mosseri in May. Mosseri, who previously ran Facebook’s news
feed, is most likely the next leader of Instagram, according to people familiar
with the matter.
Those shuffles, combined with the founders’ departures,
create an opening for Facebook to take charge of the product more directly. Now
Zuckerberg has to decide how far to push, without risking the value of
Instagram’s less-tarnished brand.
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